In the backdrop of Russia-Ukraine tensions, the risk perception in global markets decreased. 

As a result, inflation data and political statements in the eurozone are expected to be decisive in the markets on Wednesday.

After Russian President Vladimir Putin officially recognized breakaway regions in eastern Ukraine, the EU, the UK, Japan and the US announced a series of sanctions against Russia on Tuesday.

US President Joe Biden announced sanctions on two major Russian financial institutions blocking the Russian government’s access to Western financing, and also sanctioning people close to Putin and his family members.

German Chancellor Olaf Scholz ordered that the certification process of the Nord Stream 2 natural gas pipeline, which will carry Russian gas to Germany, will be stopped.

Meanwhile, the Russian Parliament approved Putin’s application for the military to operate outside of Russia’s territory.

Amid rising geopolitical tension, the price of Brent oil per barrel on Tuesday, after seeing the highest level since September 2014 with $96.6, went down and closed the day at $93.5 — a decrease of 0.8% compared to the previous close.  

Oil prices

The barrel price of Brent oil is traded at $94 in Asian markets on Wednesday.

The ounce price of gold, which saw the peak of 8 months with $1,914 on Tuesday, was stabilized just below $1,900 currently.

On the equity markets side, volatility is observed to be high, while the RTS index in Russia hit its lowest level since November 2020 with 1,075.98 points on Tuesday.

RTS index, which lost 11% during the day, went positive with purchases and finished the day at 1,227 points with a 1.6% gain.

The dollar/Russian ruble parity also tested the highest level since March 2020 with 81 on Tuesday, and is trading at 78.6 currently.

The New York stock market, which was closed on Monday due to the holiday, followed a sales-weighted course on Tuesday due to the recent developments.   


On the macroeconomic data side, although the Purchasing Managers’ Index (PMI) for the manufacturing industry and services sector came in above expectations in the US, the Dow Jones index fell by 1.42%, the S&P 500 index by 1.01% and the Nasdaq index by 1.23%.

While the dollar index continued its horizontal movement just above 96, the 10-year bond yield of the US, which was below 1.85% on Tuesday, rose again to the level of 1.94%.

On the European side, while the concerns about the sanctions against Russia and the effects of a new cut in energy supply on the economies have increased, the issue of how the increase in natural gas and oil prices will contribute to inflation has started to be discussed.

This situation increased the importance of the guidance of the European Central Bank (ECB), which gave tightening signals, for the future of monetary policies.

Following the increasing tension between Russia and Ukraine, natural gas prices in Europe for March futures contracts increased by 10% on Tuesday, reaching €80 ($90.6).

While the DAX 30 index decreased by 0.26% in Germany, the FTSE 100 index rose by 0.13% in the UK, and the CAC 40 index in France remained flat.

Euro/dollar parity closed Tuesday at 1.1325 with an increase of 0.1%.

Although geopolitical risks and the rise in oil prices are factors that limit the risk appetite throughout Asia, it is seen that the stock markets have started Wednesday better.

– Asia

While Japan’s House of Representatives approved the 107.6 trillion yen ($938 billion) budget for the 2022 fiscal year, the country’s stock market is closed on Wednesday due to a holiday.

Close to the closing, Shanghai composite index in China increased by 0.8%, Kospi index in South Korea increased by 0.5% and Hang Seng index in Hong Kong increased by 0.9%.

While a negative course was observed in Borsa Istanbul in parallel with the declining risk appetite in the global markets on Tuesday, the BIST 100 index closed the day at 2,017.46 points with a drop of 1.01%.

Analysts stated that the news flow regarding the Russia-Ukraine crisis remained at the center of the agenda and said that the announced sanctions could be reshaped depending on the progress of the situation in Ukraine.

Analysts said that in the current conjuncture, where political statements are intensified, investors are trying to understand the trend, and that the reflection of developments on energy prices will be critical in terms of inflation expectations and the course of monetary policies.

In addition to the statements of the ECB officials, analysts will monitor inflation data in the Euro area on Wednesday.

*Writing by Gokhan Ergocun

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